top of page
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute

Economics and Business

Quarterly Reviews

ISSN 2775-9237 (Online)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
crossref
doi
open access

Published: 22 April 2020

Human Capital, Capital Stock Formation, and Economic Growth: A Panel Granger Causality Analysis

Ejiro U. Osiobe

New Mexico State University (USA), Ane Osiobe International Foundation

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

Download Full-Text Pdf

doi

10.31014/aior.1992.03.02.221

Pages: 569-582

Keywords: Unit Root, Panel Cointegration, Granger Causality, Human Capital, Latin American Countries, Educational Investment, Sustainable Economic Growth

Abstract

Fostering educational practices, increasing enrollments rate, and improving learning is a central part of most economic development strategies. Most economists from the 20th and early 21st century see the idea of increasing the public’s aggregate per capita investment in human capital as a controversial topic; because the expansion of education has not guaranteed improved economic conditions in some regions. The variables used in the study include 14 Latin American countries that have been analyzed, and the results show a strong causal relationship between real gross domestic product per capita–purchasing power parity and human capital. Although the study doesn’t find a direct Granger causal relationship moving from human capital to real gross domestic product per capita-purchasing power parity, there is an indirect Granger causal relationship between our variables of interest. The association can be found in the bidirectional Granger causal relationship between human capital and trade balance.

References

  1. Akaike, H. (1969). Fitting the Autoregressive Model for Prediction. Annals of the Institute of Statistical Mathematics, 21(1), 243-247. https://doi.org/10.1007/BF02532251

  2. Akaike, H. (1974). A New Look at the Statistical Model Identification. IEEE Transaction on Automatic Control, 19(6), 716-723. https://doi.org/10.1109/TAC.1974.1100705

  3. Al-Yousif, Y. K. (2002). Financial Development and Economic Growth. Review of Financial Economics, 11(2). https://doi.org/10.1016/S1058-3300(02)00039-3

  4. Barro, J. R., & Lee, J.-W. (2013). A new data set of educational attainment in the World, 1950 - 2010. Journal of Development Economics, 104, 184 - 198. https://doi.org/10.1016/j.jdeveco.2012.10.001

  5. Batchelor, R. (2018). Retrieved 5 12, 2018, from http://www.eco.uc3m.es/~jgonzalo/teaching/PhDTimeSeries/CointeEviews.pdf

  6. Breitung, J. (2000). The Local Power of Some Unit Root Test for Panel Data. JAI, 15, 161-178. https://doi.org/10.1016/S0731-9053(00)15006-6

  7. Breitung, J., & Das, S. (2005). Panel unit root test under cross-sectional dependence. Statistica Neerlandica, 59, 414-433. https://doi.org/10.1111/j.1467-9574.2005.00299.x

  8. Breitung, J., & Hashem, P. M. (2005). Unit Roots and Cointegration in Panels. Discussion Paper Series 1: Economic Studies No. 42.

  9. Edrees, A. (2016). Human Capital, Infrastructure, and Economic Growth in Arab World: A Panel Granger Causality Analysis. Business and Economics Journal.

  10. Engle, R. F., & Granger, C. (1987). Co-Integration and Error Correction: Representation, Estimation, and Testing. Econometrica, 55(2), 251-276. https://doi.org/10.2307/1913236

  11. E-Views (2019). E-views Help Intro Vector Autoregression And Error Correction Models. Retrieved 5 12, 2018, from http://www.eviews.com/help/helpintro.html#page/content/VAR-Vector_Autoregression_and_Error_Correction_Model.html

  12. E-Views (2019). E-views help Intro Vector Error Correction (VEC) Models. Retrieved 5 12, 2018, from http://www.eviews.com/help/helpintro.html#page/content/VAR-Vector_Error_Correction_(VEC)_Models.html

  13. Gujarati, N., Porter, D., & Gunasekar, S. (2012). Basic Econometrics. New York, NY: Mc Graw Hill Education.

  14. Holland, M., Vieira, V. F., Da Silva, G. C., & Bottecchia, C. L. (2013). Growth and Exchange rate Volatility: A Panel Data Analysis. Applied Economics, 45(26). https://doi.org/10.1080/00036846.2012.730135

  15. Kao, C. (1999). Spurious regression and residual-Based Test for Cointegration in Panel Data. Journal of Econometrics, 90(1), 1-44. https://doi.org/10.1016/S0304-4076(98)00023-2

  16. Khembo, F., & Tchereni, H. M. (2013). The Impact of Human Capital on Economic Growth in the SADC Region. Developing Country Studies, 3(4).

  17. Kyung, S. I., Pesaran, M. H., & Shin, Y. (2003). Testing for Unit Root in Heterogeneous Panels. Journal of Econometrics, 115(1), 53-74. https://doi.org/10.1016/S0304-4076(03)00092-7

  18. Levin, A., Lin, C.-F. L. & Chi, C.-S. J. (2002). Unit Root Tests in Panel Data: Asymptotic and Finite-Sample Properties. Journal of Econometrics, 108(1), 1 - 24. https://doi.org/10.1016/S0304-4076(01)00098-7

  19. Malthus, T. R. (1798). An Essay on the Principle of Population. 1st, Londo: William Pickering.

  20. Mankiw, N. G., Romer, D., & Weil, N. D. (1992). A Contribution to the Empirics of Economic Growth. The Quarterly Journal of Economics, 107(2), 407- 437. https://doi.org/10.2307/2118477

  21. Marx, K. (1844). Economic and Philosophic Manuscripts.

  22. Marx, K. (1867). Capital: Critique of Political Economy.

  23. Mehrara, M., & Musai, M. (2013). The Relationship between Economic Growth and Human Capital in Developing Countries. International Letters of Social and Humanistic Sciences, 5, 55-62. https://doi.org/10.18052/www.scipress.com/ILSHS.5.55

  24. Mill, J. S. (1871). Principle of Political Economy. London: Longmans, Green, Reader, and Dyer.

  25. Osiobe, E. U. (2020). Human Capital and Economic Growth in Latin America: A Cointegration and Causality Analysis. Working Paper.

  26. Osiobe, E. U. (2019). A Literature Review of Human Capital and Economic Growth https://doi.org/10.5296/ber.v9i4.15624

  27. Pedroni, P. (2002). Critical Value for Cointegration Test in Heterogeneous Panels with Multiple regressors. Oxford Bulletin of Economics and Statistics, 61(S1). https://doi.org/10.1111/1468-0084.61.s1.14

  28. Pedronic, P. (2004). Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Test with an Application to the PPP Hypothesis. Economic Theory, 20(325-597). https://doi.org/10.1017/S0266466604203073

  29. Penn World Table Equation: Human Capital in PWT 9.0. (2019). PWT 9.0. (Penn World Table) Retrieved 10 6, 2019, from https://www.rug.nl/ggdc/docs/human_capital_in_pwt_90.pdf

  30. Penn World Tables, (2019). Retrieved 1 25, 2019, from http://datacentre2.chass.utoronto.ca/pwt/alphacountries.html

  31. Phillips, C. P. (1995). Fully Modified Least Squares and Vector Autoregression. Cowles Foundation Paper. https://doi.org/10.2307/2171721

  32. Psacharopoulos, G. (1994). Return to investment in education: A global update. World Development, 22(9), 1325-1343. https://doi.org/10.1016/0305-750X(94)90007-8

  33. Rahman, M. (2011). Causal Relationship Among Education Expenditure, Health Expenditure, and GDP: A Case Study for Bangladesh. International Journal of Economics and Finance, 3(3). https://doi.org/10.5539/ijef.v3n3p149

  34. Ricardo, D. (1817). The Principle of Political Economy and Taxation.

  35. Romer, P. (1989). Human Capital and Growth: Theory and Evidence. NBER Working Paper No. 3173. https://doi.org/10.3386/w3173

  36. Romer, P. (1990). Endogenous Technological Change. Journal of Political Economy, 98(5), 71-102. https://doi.org/10.1086/261725

  37. Romer, P. (1994). The Origins of Endogenous Growth. The Journal of Economic Perspectives, 8(1), 3-22. https://doi.org/10.1257/jep.8.1.3

  38. Schwarz, G. (1978). Estimating the Dimension of a Model. The Annals of Statistics, 6(2), 461-464. https://doi.org/10.1214/aos/1176344136

  39. Sharma, P., & Sahni, P. (2015). Human Capital and Economic Growth in India: A Co-integration and Causality Analysis. Ushus J B Mgt, 14(2), 1-18. https://doi.org/10.12725/ujbm.31.1

  40. Shibata, R. (1976). Selection of the order of an Autoregressive Model by Akaike's Information Criterion. Biometrika, 63(1), 117-126. https://doi.org/10.1093/biomet/63.1.117

  41. Sims, A. C. (Jan 1980). Macroeconomics and Reality. Econometrica, 48(1), 1-48. https://doi.org/10.2307/1912017

  42. Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. https://doi.org/10.1093/oseo/instance.00043218

  43. STATA (2019). Stata manuals 13 Vec Intro. Retrieved 5 12, 2018, from https://www.stata.com/manuals13/tsvecintro.pdf

  44. Task Force on Measuring Human Capital. (2016). Guide on Measuring Human Capital. New York and Geneva: United Nations.

  45. United Nations. (2020, 2 8). Retrieved from https://www.un.org/en/

  46. West, E. G. (2020). The Political Economy of Alienation: Karl Mark and Adam Smith. Oxford Economic Papers, 1-23.

  47. Yate, F., & Fisher, R. A. (1925). Statistical Method for Research Workers.

bottom of page